Foreign Direct Investment and the Single Market



Table 1: Sales of Different Firms under Alternative FDI Regimes

FDI

Regime '

Sales in Country i by

Sales in Country j by

MNC: xt0

Firm i: xii

Firm j: xij

MNC: X0

Firm i: xji

Firm j: xjj

0: X

ɪ-t

2

-

-

1-t

2

-

-

0: F1

ɪ
2

-

-

l-τ

2

-

-

0: Fn

ɪ
2

-

-

ʌ
2

-

-

n: X

1 -(n+l)Z+(n-l)τ

l+f+(n-l)τ

l+f-3τ

l-(n+l)f+(n-l)τ

l+f-3τ

l+f+(n-l)τ

n+2

n+2

n+2

n+2

n+2

n+2

n: F1

l+(n-l)τ

l+(n-l)τ

l-3τ

l-2τ

l-2τ

l+nτ

n+2

n+2

n+2

n+2

n+2

n+2

n: Fn

l+(n-l)τ

l+(n-l)τ

l-3τ

l+(n-l)τ

l-3τ

l+(n-l)τ

n+2

n+2

n+2

n+2

n+2

n+2

Note: Operating profits in country i are equal to the square of sales there in all cases.

X: MNC located outside the union

F1: MNC located in one union country (country i) only

Fn: MNC located in all union countries

29



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